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3 Earnings Reports That Caught My Attention Last Week

Monday - 2/25/2013, 6:30pm  ET

As first-quarter earnings hit a midpoint, I can't help but point out that the majority of earnings reports we've covered over the past year have been better than expected. With so many companies reporting during the weeks that comprise earnings season, it's easy for some earnings reports to fall through the cracks.

Each week for the past year, I've taken a look at three companies that could be worth further research after either beating or missing their profit expectations. Today, we'll take a gander at three more companies that reported earnings last week. They may have slid under your radar, but they deserve a look.

Company

Consensus EPS

Reported EPS

Surprise

Coeur d'Alene

$0.20

$0.41

105%

Jack in the Box

$0.39

$0.55

41%

Windstream

$0.13

$0.11

(15%)

Source: Yahoo! Finance.

Coeur d'Alene
There's little denying that precious metal prices (e.g., gold and silver) have been struggling in recent weeks. News from the Federal Reserve last week that it may stop or slow purchases totaling $85 billion of U.S. Treasuries and mortgage securities before unemployment levels reach 6.5% proved enough to spook gold prices to multi-month lows. Despite this, silver and gold miner Coeur d'Alene produced fundamentally solid results in an otherwise challenging environment.

For the quarter, Coeur d'Alene saw net metal sales dip 12% to $895.5 million, but it did realize 3% higher gold production and higher realized gold and silver selling prices. The really exciting news is the expected production increase at its Rochester mine. Production levels are estimated to increase 35% to 50% from 2012 levels to 4.5 million to 5 million ounces of silver and approximately 45,000 ounces of gold, and this production boost is anticipated to continue for seven years. Furthermore, gold cash operating costs are expected to fall significantly from 2012 levels at the Rochester mine. All told, silver production is expected in a range of 18 million to 19.5 million ounces as compared to 18 million ounces in 2012. 

With silver being one of the best conductors of electricity, its use in electronics equipment, like RF connectors, is practically unparalleled. A resurgence in tech spending coupled with better operating efficiency should help drive margins higher and place a floor under its realized silver prices. I'd suggest getting Coeur d'Alene on your watchlist sooner rather than later.

Jack in the Box
I have to hand it to Jack in the Box; that was an amazing first-quarter report! For the quarter, Jack in the Box reported a same-store sales increase of 2.1% at its Jack in the Box locations and a 1.5% boost at Qdoba. Profit also came in well above Wall Street's expectations, with its 2013 full-year EPS estimate range of $1.48-$1.63 right in line with the $1.55 estimate currently on the Street. In spite of these positives, I still see plenty of reasons to be suspicious of a continued rally in Jack in the Box's share price.

For one, Jack in the Box alluded to commodity costs rising 2% to 3% this year as compared to the less than 1% commodity costs inflation it suffered in the first quarter. For the remaining three quarters, beef prices are expected to rise 4% and chicken prices are forecast to jump 6%. McDonald's is facing similar commodity price increases, and they tend to hit the golden arches hardest on its value menu. McDonald's, as much as it would like to boost its value menu prices to counter inflation, really doesn't have much room to move these prices as they're the hook that drives many first-time customers into its stores. Raise prices here and you risk sending consumers to your competitors. The same can be said for Jack's value menu.

Perhaps more of a head-scratcher is the company's lopsided growth plan, which has it on pace to open 70 to 85 Qdoba restaurants and only 20 to 25 Jack in the Box restaurants in 2013. Its Jack in the Box restaurants are where it can steal market share from McDonald's and also what offers the greatest potential for same-store sales growth. It's as if Jack's management team is content on remaining in McDonald's shadow to lead the sector out of its struggles. With the stock at 20 times this year's earnings and with costs rising, I'd suggest avoiding this combo.

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